This page contains a summary of the contribution levels, income limits and eligibility rules for popular tax-advantaged retirement plans. Links to detailed articles and additional resources are also provided. All data provided is for the most recent tax year, unless noted. If this was useful information and you want to get the latest updates please considering liking or following this page via one of the social media options you see on this site,

Employer Sponsored 401(k) and 403(b) Plans

Every year401(k) standard contribution limits, which also applies to 403b, 457 plans, and the federal government’s Thrift Savings Plan, are released by the IRS. These figures are closely watched by millions of Americans who rely on these tax-advantaged savings for their retirement savings. The limits are even more closely watched by those in the financial industry given that even marginal increases in these limits can result in billions of dollars in additional retirement savings. Limits are reviewed every year based on final inflation figures per the latest cost of living adjustment (COLA) figures. Sometimes they go up but of late have tended to also stay the same year over year.

In addition to the limit on elective deferrals shown in the table below, annual employer and employee contributions to all of your retirement accounts may not exceed the lesser of 100% of your compensation or the IRS prescribed limit.

Year

Contribution Limit

Maximum Employer Contribution

Max. for ALL Contributions (excl. Catch-up)

Additional Catch-up Amount (age > 50)

2018

$18,500

$36,500

$55,000

$6,000

2017

$18,000

$36,000

$54,000

$6,000

2016

$18,000

$35,000

$53,000

$6,000

2015

$18,000

$35,000

$53,000

$6,000

2014

$17,500

$34,500

$52,000

$5,500

2013

$17,500

$33,500

$51,000

$5,500

2012

$17,000

$33,000

$50,000

$5,500

2011

$16,500

$32,500

$49,000

$5,500

Your annual contribution limit is the combined total maximum contribution that you can make each year to ALL 401k plans in which you participate, including standard 401k plans and Roth 401k plans— and is the lower of: (1) the maximum percentage contribution limit allowed under each of your employers’ plans, or (2) the dollar limits shown in the table above. For example, if your employer’s 401k plan allows you to contribute up to a maximum of 10% of your salary, and you earn $50,000, your maximum contribution limit is $5,000, not the $18,000 annual contribution limit (for 2017) that applies only to higher-paid employees.

Additional total limits. In addition to the limit on elective deferrals shown in the table above, annual contributions to all of your accounts may not exceed the lesser of 100% of your compensation. Further, there are compensation limitations that need to be taken into account when determining employer and employee contributions as shown in the table below. [Get more details in this article]

Year

Annual Comp Limit

Highly Compensated Employee Threshold

Key Employee in Top-Heavy Plan

2018

$275,000

$120,000

$175,000

2017

$270,000

$120,000

$175,000

2016

$265,000

$120,000

$170,000

2015

$265,000

$120,000

2014

$260,000

$115,000

Maximum Employer Contributions. Matching 401K or 403b contributions made by your employer are NOT counted toward your annual 401k contribution limits (elective deferrals). Even if you contribute the maximum amount each year, your employer’s matching contributions are in addition to these 401k limits. Eg, your employer’s 401K maximum contribution limit in 2017 is $36,000 ($54,000 – $18,000) or 100% of your salary, whichever is the smaller amount. Though most employers rarely give anywhere near the maximum, with most generally matching 3% to 6% of employee contributions.

Catch-up contributions. If you are age 50 or over at the end of the calendar year, you are permitted to make additional, “catch-up”, elective deferral contributions. These catch-up contributions are not subject to the annual general limits that apply to 401k plans. The catch-up contribution you can make for a year cannot exceed the lesser of the annual catch-up contribution limit, or the excess of your compensation over the elective deferrals that are not catch-up contributions.

Roth 401k Plans – A number of employers are now offering a Roth option in addition to their traditional 401K plan. Roth 401k plans have the same tax considerations and benefits as the Roth IRA plan described below – i.e contributions are after tax, but withdrawals/investment earnings are tax free after retirement age; but allow you to contribute up to the much higher 401k annual plan limits shown in the table above. Note that the combined annual limit applies to both plans. So while you can divide your contributions across a traditional 401k and a Roth 401k, the combined contribution across both plans cannot exceed the IRS annual maximum.

Their are also no income restrictions for Roth 401K plan contributions as their for traditional Roth IRA plans. Another benefit of the Roth 401k is that you can roll the account over to a Roth IRA and avoid the minimum distribution requirement (begins for retirees at 70 1/2.)

Traditional IRA Plans

An IRA (individual retirement account) is your personal savings plan for retirement, offering tax advantages and growth that compounds over time. Unlike employer sponsored 401k plans, where the administration is taken care of by the company, you are responsible for the opening and ongoing management of your IRA account. You can also rollover funds between the different IRA account types as your financial, employment or tax situation changes.

There are 3 things you need to consider when determining if you can make IRA contributions. The first is whether you (or your spouse if applicable) already contribute to an employer sponsored retirement account, like a 401k or 403b plan (discussed above). Secondly you need to see what you can contribute based on your Modified Adjusted Gross Income (MAGI). Finally you need to determine how much you can contribute based on your filing status and age.

For workers already covered by an employer sponsored retirement plan (401k, 403b), contributions to a self-managed IRA plan are only tax deductible if their adjusted gross income (AGI) is within the limits shown in the table below. IF you are below the income threshold range then the entire contribution (up to maximum limit) is tax deductible. If your income is in between the threshold range then only a partial amount of the contribution is deductible. For income levels above the threshold range then none of the contribution is deductible.

If you are married and not covered by an employer sponsored plan BUT your spouse has an employer sponsored plan then you can still contribute to an IRA plan. The IRS has provided higher income limit thresholds for claiming a tax deduction on contributions to accomodate this situation. You can see this in the “(Married and Spouse has Employer Plan) ” income threshold line within the table below.

There are no contribution income limits and your IRA tax deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.

Roth IRA Plans

Roth IRA annual contribution limits have remained unchanged for several years, but income (AGI) increased moderately in line with inflation. The AGI increases mean more people are eligible to open a Roth IRA account and take advantage of the post-retirement tax benefits.

Unlike 401(k) and Traditional IRA plans, you cannot deduct contributions to a Roth IRA from your taxable income. But this is offset by the fact that gains and distributions are tax-free after you reach the qualified retirement age (59½). This is great for people who think that they will be in a higher taxable income bracket and/or that tax rates will be higher during their retirement years. There are however much more stricter limitations to contributing to a Roth IRA account based on your filing status, other employer retirement plan contributions and overall income as shown in the table below.

If your income is above the specified range you will not be eligible to open a Roth IRA account (if you do, you will face a penalty). For incomes in between the threshold ranges you can only make a partial contribution to a Roth IRA account. For incomes below the threshold range the maximum contribution can be made.

Year

Roth IRA Contribution Limit

Single Filer Phase Out Range

Married, Joint Filer Phase Out Range

Married, Filing Separate Phase Out Range

2018

$5,500 ($6,500 if 50 or older)

$120,000–$135,000

$189,000–$199,000

$0–$10,000

2017

$5,500 ($6,500 if 50 or older)

$118,000–$133,000

$186,000–$196,000

$0–$10,000

2016

$5,500 ($6,500 if 50 or older)

$117,000–$132,000

$184,000–$194,000

$0–$10,000

2015

$5,500 ($6,500 if 50 or older)

$116,000–$131,000

$183,000–$193,000

$0–$10,000

Looking to open your first Roth IRA or to rollover retirement assets from a previous employer’s 401(k)s or IRA held elsewhere? Then consider opening a no-fee retirement Roth IRA account with TD Ameritrade to reduce your taxable income.

A Roth IRA also has the following benefits and constraints that you need to be aware of:

To avoid penalties and receive qualified tax free distributions from your Roth IRA account must meet ALL the following conditions:

Funds (via contributions) must have been in your account for at least 5-years, and

Distributions from the Roth IRA account are made on or after the date you reach age 59½ or made because you become permanently disabled

You can make contributions to your Roth IRA after you reach age 70 ½, unlike traditional IRA plans

You can also take out up to $10,000 of your contributions to a Roth IRA, without penalty, for a first time home purchase

You can leave funds in your Roth IRA account as long as you live. Unlike traditional IRA and 401(k) plans there is no required minimum distribution. This makes a Roth IRA a very effective inheritance vehicle because you may potentially reduce or eliminate the taxes your beneficiaries will have to pay after inheriting your estate

The retirement account must be designated as a Roth IRA when it is set up

SEP IRA Plans

A Simplified Employee Pension (SEP) IRA plan provides self employed or small business owners with a few staff a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement. Like a traditional IRA plan, contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred. Withdrawals after age 59 1/2 are taxed as ordinary income. Withdrawals prior to age 59 1/2 may incur a 10% IRS penalty as well as income taxes.

A SEP is set up by an employer – including a self-employed person who is both the employee and employer in this situation – and permits the employer (not the employee) to make tax deductible contributions to the SEP IRA accounts of eligible employees. An eligible employee for a SEP IRA is one who meets the following requirements:

* attained age 21;
* has worked for the employer in at least 3 of the last 5 years;
* has received the annual minimum compensation amount (see table below) over the last two years from the employer for each year

The table below shows the SEP contribution limits over the last few years along with some other key eligibility limits.

Item/Year

2018

2017

2016

2015

2014

SEP Employer Contribution Limit

$55,000 or 25% of compensation

$54,000 or 25% of compensation

$53,000 or 25% of compensation

$53,000 or 25% of compensation

$52,000 or 25% of compensation

SEP minimum compensation

$600

$600

$600

$600

$550

SEP annual compensation limit

$275,000

$270,000

$265,000

$265,000

$260,000

Contributions must be made in cash (no stock) and you have up to April 15, to contribute for the past year’s SEP IRA. A SEP provides high maximum contribution limits and relatively low setup cost, but an employer sponsored Individual 401k may allow a greater contribution at the same income level.

You can contribute concurrently to both a 401(k) and SEP IRA. However each contribution is treated separately, up to the 401K annual limit and overall maximum contribution amount listed above.

Also, for those age 50+ there isn’t an additional catch-up contribution provision like there is with the Individual 401k. A final point to consider is IRS rules do not permit loans with a SEP IRA. You can see more on SEP IRAs in this article.

Simple IRA Plans

A simple IRA is also a small business IRA-based plan with a simplified method for employers to make direct contributions toward their employees’ retirement and their own retirement. Employees may choose (not mandatory) to make regular elective contributions, while their employer makes matching or non-elective contributions. SIMPLE IRAs are ideally suited as a start-up retirement savings plan for small employers who do not currently sponsor a 401k retirement plan. The main advantage of a Simple IRA for employers to other tax advantaged retirement plans described above is the much lower administration costs. In order to establish a SIMPLE IRA, the business must have 100 or fewer employees and it also cannot have any other type of retirement plan in place.

2017 Contribution Limits (no changes from 2016) : An employee may defer up to $12,500 for 2017, with employees over age 50 allowed to make a catch-up contribution of up to $3,000 (for a total of $15,500).

2016 Contribution Limits: An employee may defer up to $12,500 for 2016, with employees over age 50 allowed to make a catch-up contribution of up to $3,000 (for a total of $15,500).

2015 Contribution Limits: An employee may defer up to $12,500 for 2015 (a $500 increase over 2014), with employees over age 50 allowed to make a catch-up contribution of up to $2,000 (for a total of $14,500).

Contributions under a SIMPLE IRA plan that count toward the overall annual limit on elective deferrals an employee may make to tax advantaged retirement plans. The employer is generally required to match each employee’s salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee’s compensation. See this article for more on SIMPLE IRA’s

When Can I Withdraw my Retirement Account Savings?

The key ages at which you can withdraw funds from the most commonly used retirement accounts without paying a penalty are:

401K and 403b retirement plans are generally company sponsored and the age at which you can start taking penalty (10%) free withdrawals is 59½ . However, you must start taking the minimum distribution (based on a variety of factors) by age 70½. You will have to pay regular income taxes on any withdrawals from 401K plans.

IRA are self-run tax-deferred retirement plans with investors being able to deduct all or part of their contributions from pretax income if certain conditions are met. Like a 401K, the official retirement age at which you can make penalty free withdrawals is 59½. You also may owe an excise tax if you do not begin to withdraw minimum distributions by April 1st of the year after you reach age 70½.

Roth IRA. Because a Roth IRA does not permit a tax deduction at the time of contribution, the restrictions on withdrawals are a little different to a traditional IRA. Contributions can also be made to your Roth IRA after you reach age 70½, unlike a traditional IRA. There is no requirement to start taking distributions while the owner is still alive and in fact the entire proceeds can be passed to your heirs tax free, a very useful estate planning feature. If you do take the tax free distributions, you can only do so after the savings have been in the account for a 5-year period beginning with the first taxable year for which a contribution was made (known as qualified distributions). Also, the IRA age limit for withdrawal still applies where you can only take penalty (10%) free distributions after you reach age 59½. A Roth IRA also allows you to take a one-time penalty and tax free $10,000 withdrawal if buying your first home.

There are exceptions to the above age limits based on special conditions and extenuating circumstances like spouse death, hardship, disability and qualified medical expenses. Also the payments from retirement plans can be provided as lump-sum distributions or via periodic payments (e.g. like an annuity) depending on the terms of the plan. Consult the IRS website and your plan administrator (e.g Vanguard, Fidelity etc) for detailed rules and regulations.

Can I Make Catch-Up Contributions to 401K, IRA, 403b and SIMPLE IRA Retirement Plans?

As detailed in this article, catch-up contributions allow people who feel that they do not have enough of a nest egg to make higher retirement plan contributions as they approach retirement.The catch-up contribution is not prorated or apportioned in the year you turn 50. This means that as long as you turn 50 by December 31st of the given year, you can make the full catch-up contribution amount.

In addition to standard deferral/contribution limits, eligible participants over 50 can make catch-up contributions up to $6,000. The following plans are covered by this maximum limit : 401(k), 403(b), and governmental 457(b). Plan contributions are not treated as catch-up contributions until they exceed the annual standard limit shown in the tables above. Catch-up contributions are generally made in the same manner as regular contributions, i.e. through an automatic payroll deduction or via the plan administrator. They must also be made before the end of the plan year which varies by plan and employer, but generally ranges from December 31st to April 15th.

For those over 50, SIMPLE IRA or SIMPLE 401(k) plans may permit catch-up contributions up to $3,000. You can also make catch-up contributions of up to $1,000 to your Traditional or Roth IRA. Catch-up contributions to an IRA are due by the due date of your tax return (not including extensions). SEP-IRAs, which have higher maximum contribution limits, do not allow additional catch-up contributions like the other tax-advantaged retirement plans discussed above.

I have a question regarding the total combined contributions allowed for 401K and IRA Roth.
I am currently employed and am over 50 years old.
I usually have been contributing the maximum allowed to my 401K of $24,000 in 2016. For the year 2017 I did not contribute to 401K so I can focus paying off my mortgage. In 2017 I did make a check for $6,000 towards my IRA Roth.
My mortgage is paid off and now i want to restart my $401K & IRA Roth. I am interested in contributing $22,000 to 401K & $6,500 to IRA Roth.
My employer said the total combined contribution is $28,500 and told me the limit is $24,500. So they said my contributions for 2018 is $6,500 to IRA Roth and $18,000 to 401K. I looked all over the internet including the IRS web site for maximum combined contributions allowed and can’t find anything on it.
Is my employer correct of he should see them as different contributions?

Normally a 401k is contributed at work while a Roth IRA is set up yourself with a brokerage. Some companies offer this but unless they’re offering some matching incentive there’s no need to use your employer for the IRA. The 401k contribution limit this year is $18,500 and your catch-up is $6000 for being age 50 which is where the $24,500 is coming from. Separate from that the Roth contribution limit is $5500 with $1000 catch-up for the $6500 you mention. The only thing I can think of is they think you are asking to split your 401k between traditional and Roth where the combined limit would be $24,500.

I(age 80) and my wife(age 77) have had traditional IRA accounts each accounts.

We have been withdraw annually since we are under RMD case. May(Can) we change to different type of IRA account like Roth IRA
or another type of IRA accounts for less income tax ?
Please advise “kimpexla@yahoo.com”
Have Happy Holiday.
Kenny Kim

I’m still confused. I have searched the deep corners of the internet. I do not qualify for any deductions (single, no children, no property, no head of household). I have an employer sponsored 403b and defined contributions (which is treated like a traditional IRA) and I opened a roth IRA, I’m under 50 and I make over 100K but less than 110k. Can I max out my 18000 contribution limit with 5500 to my roth and then 12,500 spread across my 403b and defined contributions? Or does that work differently because my employer contributes all the money in my defined contributions account and I just get matching on my 403b contributions (I only put 8% in but they match 2%)? Essentially I am worried I’ll add too much and not get a tax deduction. . .

My employer caps our 401K deferrals at 15% of our salary. I give the 15% max but it isn’t enough to reach the $18,000 max for annual deferrals. I am also not allowed to make “catch up contributions” due to the fact that I haven’t reached the $18,000 limit. I want to put more money into my 401K but cannot do so due to these restrictions. It seems these restrictions are extremely unfair to lower income earners who cannot max out the $18,000 deferral limit with a strict 15% cap on deferrals. Are these restrictions allowed by law? Shouldn’t i be able to contribute more?

I have an employer 401 k Plan and I have contributed $13,000. I also have self employment income of $8,000 and 3elf employed Keogh plan. Since I am over 55, can I put the catch-up portion in the Keogh Plan plus 20% of the net s/e income???

To clarify; If I have SE income of $300,000 my max IRASEP contribution is $53,000. If I also have W-2 income and max out my 401(k), to calculate the amount I can contribute to my IRASEP I take 53,0000 – my 401(k) contribution = max to contribute to IRASEP

Actually they do. Per the IRS: A 457(b) plan’s annual contributions and other additions (excluding earnings) to a participant’s account cannot exceed the lesser of:
100% of the participant’s includible compensation, or the elective deferral limit ($17,500 in 2014, $18,000 in 2015). This is the same as the 401K limits.

One part you are right on is that some plans allow Special 457(b) catch-up contributions (3 years prior to the normal retirement age) which allow participants to contribute the lesser of: Twice the annual limit ($35,000 in 2014, $36,000 in 2015), or The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50 or over catch-up contributions)

Relevant passage:
“The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you’re in. This limit must be aggregated for these plan types:
401(k)
403(b)
SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
SARSEP

“If you’re in a 457(b) plan, you have a separate limit that includes both employee and employer contributions.”